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| Subject: SEC Rule 10b-18 In 1982, the US Securities and Commission adopted Rule 10b-18,4 which provides that an issuer will not be deemed to have violated Sections 9(a)(2) and 10(b) of the Exchange Act, and Rule 10b-5 under the Exchange Act, solely by reason of the manner, timing, price, or volume of its repurchases, if the issuer repurchases its common stock in the market in accordance with the safe harbor conditions. Rule 10b-18’s safe harbor conditions are designed to minimize the market impact of the issuer’s repurchases, thereby allowing the market to establish a security’s price based on independent market forces without undue influence by the issuer. The practical effect of this rule was to encourage massive stock buybacks by corporations as a means of manipulating prices upwards in order to give value to executive stock options. The Post Stock Buyback Era By John Schroy, on April 19th, 2009 |  Leave a comment  The Crash of 2008 signaled a turning point in capital markets. The stock buyback era seemed to have ended. The Efficient Market Hypothesis was discredited. The inability of market experts and major institutions to place a fair value on thousands of securities indicated basic problems in security analysis and the handling of freely available information. This article describes new challenges facing fundamental security analysts in the early 21st century, and the consequent opportunities. April 19th, 2009 | Print Article |  Email Article |  Topics: Auction Market Preferred Shares, Barack Obama, Barings Bank, beta, Bloomberg, Citicorp, common stock legend, complexity, covariance, efficient market hypothesis, Federal Reserve Bank, Fitch, Graham & Dodd, Inflation, Lehman Brothers, Moody's, Morningstar, Nick Leeson, SEC Rule 10b-18, Standard & Poor's, Stock Buybacks, Technical Analysis, Thomson's, US SEC | Category: New Economic Theory | Leave a comment |  Short urlHard Times By John Schroy, on April 17th, 2009 | One comment  The Crash of 2008 was the end to what I call, “the old capital markets”. A new era is beginning, but form and detail are hidden in the mists of change. It may be a decade or so before new structures and directions are visible. Many were thrown out of work by the Crash, but before getting into the unpleasant chore of actually looking for a job, you should consider whether or not you even want to work in the new capital markets. April 17th, 2009 | Print Article | Email Article | Topics: Adam Smith, back office, Bank of America, Bear Stearns, Bernard Madoff, book-entry settlement, Brazil, Capital Market Wiki, Citicorp, computerized trading, Edinburgh, FASB Statement 157, hedge funds, Hong Kong, Lehman Brothers, London, Margaret Thatcher, Merrill Lynch, New York City, SEC Rule 10b-18, Shanghai, Singapore, Stock Buybacks, unemployment | Category: World Economy | One comment | Short urlAssessing the damage By John Schroy, on April 14th, 2009 | Leave a comment  The buyback era began in 1982 when the US Securities and Exchange Commission promulgated Rule 10b-18, granting “safe harbor” to corporations that wished to use equity repurchases to boost market prices in order to give value to executive option schemes. The total value of corporate buybacks since SEC Rule 10b-18, in 2008 dollars, is estimated at $5.77 trillion. Buybacks have been funded not only from profits, but by raiding depreciation reserves and borrowing from banks. April 14th, 2009 | Print Article | Email Article | Topics: Barack Obama, Bernard Madoff, Capital Market Wiki, common stock legend, dividends, fraud, Morningstar, Ronald Reagan, SEC Rule 10b-18, Stock Buybacks, unemployment, US SEC, US taxation | Category: Stock Buybacks, featured | Leave a comment | Short urlFeatured articles on inside pages
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